Note 11 - Pension and Postretirement Benefits

12 Months Ended

Nov. 30, 2019

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 11: Pension and Postretirement Benefits

Defined Contribution Plan

All U.S. employees have the option of contributing up to 75 percent of their pre-tax earnings to a 401(k) plan, subject to IRS limitations. We match up to the first 4 percent of each employee's pre-tax earnings, based on the employee’s contributions. All U.S. employees are eligible for a separate annual retirement contribution to the 401(k) plan of 3 percent of pay, that is invested based on the election of the individual participant. The 3 percent contribution is in addition to our 4 percent matching contribution described above and is in lieu of participation in our defined benefit pension plan. The total contribution to the 401(k) plan for 2019 was $10,784 which included the cost of the 4 percent company match of $6,418 and the additional 3 percent contribution of $4,366. The total contributions to the 401(k) plan were $11,034 and $10,899 in 2018 and 2017, respectively.

The defined contribution plan liability recorded in the Consolidated Balance Sheets was $8,494 and $20,183 in 2019 and 2018, respectively for the U.S. Plan and several statutorily required non-U.S. Plans.

Defined Benefit Plans

Noncontributory defined benefit pension plans cover all U.S. employees employed prior to January 1, 2007. Benefits for these plans are based primarily on each employee’s years of service and average compensation. During 2011, we made significant changes to our U.S. Pension Plan. The changes included: benefits under the Plan were locked-in using service and salary as of May 31, 2011, participants no longer earn benefits for future service and salary as they had in the past, affected participants receive a three percent increase to the locked-in benefit for every year they continue to work for us and we are making a retirement contribution of three percent of eligible compensation to the 401(k) Plan for those participants. The funding policy is consistent with the funding requirements of federal law and regulations. Plan assets consist principally of listed equity securities and bonds. During 2015, we amended the U.S. Pension Plan to add a program for eligible employees to take a lump sum distribution. No lump sum payments were paid during 2019, 2018 and 2017. Other U.S. postretirement benefits are funded through a Voluntary Employees' Beneficiaries Association Trust.

Health care and life insurance benefits are provided for eligible retired employees and their eligible dependents. These benefits are provided through various insurance companies and health care providers. Costs are accrued during the years the employee renders the necessary service.

Certain non-U.S. subsidiaries provide pension benefits for their employees consistent with local practices and regulations. These plans are primarily defined benefit plans covering substantially all employees upon completion of a specified period of service. Benefits for these plans are generally based on years of service and annual compensation.

Following is a reconciliation of the beginning and ending balances of the benefit obligation and fair value of plan assets as of November 30, 2019 and December 1, 2018:

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2019			2018			2019			2018			2019			2018
Change in projected benefit obligation
Benefit obligation at beginning of year	$	336,889		$	379,359		$	208,075		$	223,982		$	36,842		$	43,325
Service cost		4			56			2,237			2,311			98			173
Interest cost		14,691			12,251			4,678			4,671			1,550			1,484
Participant contributions		-			-			-			-			240			330
Plan amendments		-			-			-			1,600			-			-
Actuarial (gain)/loss1		49,211			(33,052	)		30,517			(3,377	)		3,749			(5,225	)
Other		-			-			(103	)		-			-			-
Settlement payments		-			-			(307	)		-			-			-
Benefits paid		(20,407	)		(21,725	)		(8,356	)		(10,059	)		(3,223	)		(3,245	)
Foreign currency translation effect		-			-			(2,199	)		(11,053	)		-			-
Benefit obligation at end of year		380,388			336,889			234,542			208,075			39,256			36,842
Change in plan assets
Fair value of plan assets at beginning of year		346,460			378,099			169,455			187,708			82,910			79,300
Actual return on plan assets		54,527			(11,768	)		22,945			(1,240	)		12,046			4,058
Employer contributions		3,124			1,854			2,437			2,237			2,501			2,467
Participant contributions		-			-			-			-			240			330
Other		-			-			(103	)		-			-			-
Benefits paid2		(20,584	)		(21,725	)		(8,356	)		(10,059	)		(3,223	)		(3,245	)
Foreign currency translation effect		-			-			(1,047	)		(9,191	)		-			-
Fair value of plan assets at end of year		383,527			346,460			185,331			169,455			94,474			82,910
Plan assets in excess of (less than) benefit obligation as of year end	$	3,139		$	9,571		$	(49,211	)	$	(38,620	)	$	55,218		$	46,068

¹ Actuarial loss in 2019 and actuarial gain in 2018 for the U.S. Plans is primarily due to assumption changes. Actuarial loss in 2019 and actuarial gain in 2018 for the Non-U.S. Plans are due to both assumption changes and plan experience.

² Amount excludes benefit payments made from sources other than plan assets.

Amounts in accumulated other comprehensive income (loss) that have not been recognized as components of net periodic benefit cost	Pension Benefits									Other Postretirement
	U.S. Plans					Non-U.S. Plans				Benefits
	2019			2018		2019		2018		2019		2018
Unrecognized actuarial loss	$	146,149		$	130,661	$	83,457	$	69,762	$	2,114	$	3,430
Unrecognized prior service (benefit) cost		(9	)		4		1,476		1,520		-		-
Ending balance	$	146,140		$	130,665	$	84,933	$	71,282	$	2,114	$	3,430

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2019			2018			2019			2018			2019			2018
Statement of financial position as of fiscal year-end
Non-current assets	$	22,480		$	28,396		$	6,263		$	9,467		$	58,307		$	48,872
Accrued benefit cost
Current liabilities		(1,418	)		(1,493	)		(1,723	)		(2,077	)		(210	)		(201	)
Non-current liabilities		(17,922	)		(17,332	)		(53,750	)		(46,010	)		(2,879	)		(2,603	)
Ending balance	$	3,140		$	9,571		$	(49,210	)	$	(38,620	)	$	55,218		$	46,068

The accumulated benefit obligation of the U.S. pension and other postretirement plans was $409,800 at November 30, 2019 and $364,788 at December 1, 2018. The accumulated benefit obligation of the non-U.S. pension plans was $224,619 at November 30, 2019 and $200,193 at December 1, 2018.

The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of November 30, 2019 and December 1, 2018:

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2019		2018		2019		2018
Accumulated benefit obligation	$	24,344	$	23,289	$	125,073	$	115,725
Fair value of plan assets		5,004		4,514		79,437		75,397

The following amounts relate to pension plans with projected benefit obligations in excess of plan assets as of November 30, 2019 and December 1, 2018:

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2019		2018		2019		2018
Projected benefit obligation	$	24,344	$	23,338	$	134,910	$	123,484
Fair value of plan assets		5,004		4,514		79,437		75,397

Information about the expected cash flows is as follows:

	Pension Benefits				Other
	U.S. Plans		Non-U.S. Plans		Postretirement Benefits
Employer contributions
2020	$	312	$	173	$	1,500
Expected benefit payments
2020	$	21,252	$	8,091	$	3,023
2021		21,022		8,548		3,003
2022		21,288		8,620		2,971
2023		21,698		8,562		2,921
2024		21,742		8,581		2,865
2025-2029		108,959		45,646		12,832

Components of net periodic benefit cost and other supplemental information for the years ended November 30, 2019, December 1, 2018 and December 2, 2017 are as follows:

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Net periodic cost (benefit)	2019			2018			2017			2019			2018			2017			2019			2018			2017
Service cost	$	4		$	56		$	111		$	2,237		$	2,311		$	2,125		$	98		$	173		$	208
Interest cost		14,691			12,251			15,836			4,678			4,671			4,709			1,550			1,484			1,593
Expected return on assets		(25,305	)		(26,167	)		(25,458	)		(10,224	)		(11,105	)		(9,853	)		(7,013	)		(6,896	)		(5,788	)
Amortization:
Prior service cost (benefit)		13			29			29			64			(4	)		(4	)		-			-			-
Actuarial loss		4,677			5,904			5,905			3,114			2,901			3,492			33			60			1,010
Curtailment loss		-			-			-			83			-			-			-			-			-
Settlement charge		-			-			-			-			-			16			-			-			-
Net periodic (benefit) cost	$	(5,920	)	$	(7,927	)	$	(3,577	)	$	(48	)	$	(1,226	)	$	485		$	(5,332	)	$	(5,179	)	$	(2,977	)

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Weighted-average assumptions used to determine benefit obligations	2019			2018			2017			2019			2018			2017			2019			2018			2017
Discount rate		3.17	%		4.50	%		3.72	%		1.35	%		2.29	%		2.12	%		3.00	%		4.37	%		3.54	%
Rate of compensation increase1		4.50	%		4.50	%		4.50	%		1.71	%		1.75	%		1.71	%		N/A			N/A			N/A

Weighted-average assumptions used to determine net costs for years ended	2019			2018			2017			2019			2018			2017			2019			2018			2017
Discount rate		4.50	%		3.72	%		4.08	%		2.30	%		2.10	%		2.15	%		4.37	%		3.54	%		3.85	%
Expected return on plan assets		7.49	%		7.75	%		7.75	%		6.21	%		6.20	%		6.21	%		8.50	%		8.75	%		8.75	%
Rate of compensation increase1		4.50	%		4.50	%		4.50	%		1.71	%		1.75	%		1.47	%		N/A			N/A			N/A

¹ Benefits under the U.S. Pension Plan were locked-in as of May 31, 2011 and no longer include compensation increases. The 4.50 percent rate for 2019, 2018 and 2017 are for the supplemental executive retirement plan only.

The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. A higher discount rate decreases the present value of the pension obligations. The discount rate for the U.S. pension plan was 3.19 percent at November 30. 2019, compared to 4.51 percent at December 1, 2018 and 3.73 percent at December 2, 2017. Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year. A discount rate change of 0.5 percentage points at November 30, 2019 would impact U.S. pension and other postretirement plan (income) expense by approximately $235 (pre-tax) in fiscal 2020. Discount rates for non-U.S. plans are determined in a manner consistent with the U.S. plan.

For the U.S. Pension Plan, we adopted the Adjusted Pri-2012 base mortality table projected generationally using scale MP-2019.

The expected long-term rate of return on plan assets assumption for the U.S. pension plan was 7.50 percent in 2019 and 7.75 percent in 2018 and 2017. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed-income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. For 2019, the expected long-term rate of return on the target equities allocation was 8.00 percent and the expected long-term rate of return on the target fixed-income allocation was 4.45 percent. The total plan rate of return assumption included an estimate of the effect of diversification and the plan expense. A change of 0.5 percentage points for the expected return on assets assumption would impact U.S. net pension and other postretirement plan expense by approximately $2,390 (pre-tax).

Management, in conjunction with our external financial advisors, uses the actual historical rates of return of the asset categories to assess the reasonableness of the expected long-term rate of return on plan assets.

The expected long-term rate of return on plan assets assumption for non-U.S. pension plans was a weighted-average of 6.21 percent in 2019 compared to 6.20 percent in 2018 and 6.21 percent in 2017. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the effect of active management of the plan’s assets. Our largest non-U.S. pension plans are in the United Kingdom and Germany. The expected long-term rate of return on plan assets for the United Kingdom was 6.75 percent and the expected long-term rate of return on plan assets for Germany was 5.75 percent. Management, in conjunction with our external financial advisors, uses actual historical returns of the asset portfolio to assess the reasonableness of the expected rate of return for each plan.

Assumed health care trend rates	2019			2018			2017
Health care cost trend rate assumed for next year		7.00	%		6.25	%		6.50	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		0.25	%		0.25	%		5.00	%
Fiscal year that the rate reaches the ultimate trend rate	2028			2024			2024

The asset allocation for the company’s U.S. and non-U.S. pension plans at the end of 2019 and 2018 follows.

	U.S. Pension Plans									Non-U.S. Pension Plans									Other Postretirement Plans
	Target			Percentage of Plan Assets at Year-End						Target			Percentage of Plan Assets at Year-End						Target			Percentage of Plan Assets at Year-End
Asset Category	2019			2019			2018			2019			2019			2018			2019			2019			2018
Equities		60.0	%		57.7	%		59.5	%		49.0	%		49.6	%		50.8	%		0.0	%		0.0	%		0.0	%
Fixed income		40.0	%		63.8	%		40.0	%		51.0	%		50.1	%		48.7	%		0.0	%		0.0	%		0.0	%
Insurance		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		100.0	%		99.6	%		99.4	%
Cash 1		0.0	%		-21.5	%		0.5	%		0.0	%		0.3	%		0.5	%		0.0	%		0.4	%		0.6	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

¹ Negative cash for 2019 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

Plan Asset Management

Plan assets are held in trust and invested in mutual funds, separately managed accounts and other commingled investment vehicles holding U.S. and non-U.S. equity securities, fixed income securities and other investment classes. We employ a total return approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Futures and options may also be used to enhance risk-adjusted long-term returns while improving portfolio diversification and duration. Risk management is accomplished through diversification across asset classes, utilization of multiple investment managers and general plan-specific investment policies. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and our assessment of our overall liquidity position. This asset allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-needed basis. Plan assets are invested using a combination of active and passive investment strategies. Passive, or “indexed” strategies, attempt to mimic rather than exceed the investment performance of a market benchmark. The plans’ active investment strategies employ multiple investment management firms which in aggregate cover a range of investment styles and approaches. Performance is monitored and compared to relevant benchmarks on a regular basis.

The U.S. pension plans consist of two plans: a pension plan and a supplemental executive retirement plan (“SERP”). There were no assets in the SERP in 2019 and 2018. Consequently, all of the data disclosed in the asset allocation table for the U.S. pension plans pertain to our U.S. pension plan.

During 2019, we maintained our assets within the allowed ranges of the target asset allocation mix of 60 percent equities and 40 percent fixed income plus or minus 5 percent and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the plan.

The non-U.S. pension plans consist of all the pension plans administered by us outside the U.S., principally consisting of plans in Germany, the United Kingdom, France and Canada. During 2019 we maintained our assets for the non-U.S. pension plans at the specific target asset allocation mix determined for each plan plus or minus the allowed rate and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the individual plans. We plan to maintain the portfolios at their respective target asset allocations in 2020.

Other postretirement benefits plans consist of two U.S. plans: a retiree medical health care plan and a group term life insurance plan. There were no assets in the group term life insurance plan for 2019 and 2018. Consequently, all of the data disclosed in the asset allocation table for other postretirement plans pertain to our retiree medical health care plan. Our investment strategy for other postretirement benefit plans is to own insurance policies that maintain an asset allocation nearly completely in equities. These equities are invested in a passive portfolio indexed to the S&P 500.

Fair Value of Plan Assets

The following table presents plan assets categorized within a three-level fair value hierarchy as described in Note 14.

	November 30, 2019
U.S. Pension Plans	Level 1			Level 2		Level 3		Total Assets
Equities	$	126,178		$	95,271	$	-	$	221,449
Fixed income		119,103			125,329		219		244,651
Cash 2		(83,099	)		140		-		(82,959	)
Total categorized in the fair value hierarchy		162,182			220,740		219		383,141
Other investments measured at NAV 1									386
Total	$	162,182		$	220,740	$	219	$	383,527

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	32,045	$	1,247	$	-	$	33,292
Fixed income		46,262		6,819		675		53,756
Cash		506		-		-		506
Total categorized in the fair value hierarchy		78,813		8,066		675		87,554
Other investments measured at NAV 1								97,777
Total	$	78,813	$	8,066	$	675	$	185,331

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	94,082	$	94,082
Cash		392		-		-		392
Total	$	392	$	-	$	94,082	$	94,474

	December 1, 2018
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	121,087	$	85,007	$	-	$	206,094
Fixed income		33,892		104,484		266		138,642
Cash		1,222		148		-		1,370
Total categorized in the fair value hierarchy		156,201		189,639		266		346,106
Other investments measured at NAV 1								354
Total	$	156,201	$	189,639	$	266	$	346,460

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	30,123	$	1,073	$	-	$	31,196
Fixed income		44,158		6,394		662		51,214
Cash		450		-		-		450
Total categorized in the fair value hierarchy		74,731		7,467		662		82,860
Other investments measured at NAV 1								86,595
Total	$	74,731	$	7,467	$	662	$	169,455

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	82,446	$	82,446
Cash		464		-		-		464
Total	$	464	$	-	$	82,446	$	82,910

¹ In accordance with ASC Topic 820-10, Fair Value Measurement, certain investments that are measured at NAV (Net Asset Value per share) (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts represented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

² Negative cash for 2019 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

The definitions of fair values of our pension and other postretirement benefit plan assets at November 30, 2019 and December 1, 2018 by asset category are as follows:

Equities—Primarily publicly traded common stock for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: (i) U.S. and non-U.S. equity securities and mutual funds valued at closing prices from national exchanges; and (ii) commingled funds valued at unit values or net asset values provided by the investment managers, which are based on the fair value of the underlying investments. Funds valued at net asset value have various investment strategies including seeking maximum total returns consistent with prudent investment management, seeking current income consistent with preservation of capital and daily liquidity and seeking to approximate the risk and return characterized by a specific index fund. There are no restrictions for redeeming holdings out of these funds and the funds have no unfunded commitments.

Fixed income—Primarily corporate and government debt securities for purposes of total return and managing fixed income exposure to policy allocations. Investments include (i) mutual funds valued at closing prices from national exchanges, (ii) corporate and government debt securities valued at closing prices from national exchanges, (iii) commingled funds valued at unit values or net asset value provided by the investment managers, which are based on the fair value of the underlying investments, and (iv) an annuity contract, the value of which is determined by the provider and represents the amount the plan would receive if the contract were cashed out at year-end.

Insurance—Insurance contracts for purposes of funding postretirement medical benefits. Fair values are the cash surrender values as determined by the providers which are the amounts the plans would receive if the contracts were cashed out at year end.

Cash–Cash balances on hand, accrued income and pending settlements of transactions for purposes of handling plan payments. Fair values are the cash balances as reported by the Trustees of the plans.

The following is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the year ended November 30, 2019 and December 1, 2018:

	Fixed Income
U.S. Pension Plans	2019			2018
Level 3 balance at beginning of year	$	266		$	291
Purchases, sales, issuances and settlements, net		(47	)		(25	)
Level 3 balance at end of year	$	219		$	266

	Fixed Income
Non-U.S. Pension Plans	2019			2018
Level 3 balance at beginning of year	$	662		$	660
Net transfers into / (out of) level 3		28			30
Net gains		5			6
Currency change effect		(20	)		(34	)
Level 3 balance at end of year	$	675		$	662

	Insurance
Other Postretirement Benefits	2019			2018
Level 3 balance at beginning of year	$	82,446		$	78,894
Net transfers into / (out of) level 3		(403	)		(422	)
Purchases, sales, issuances and settlements, net		(720	)		(671	)
Net gains		12,759			4,645
Level 3 balance at end of year	$	94,082		$	82,446